Welcome to Metro.co.uk’s money blog — today we’re talking about fines, hidden fees, and what you can do to avoid them.
Martin Lewis was doing the rounds this week warning about the potential pitfalls of Lifetime ISA accounts, something every homeowner or aspiring buyer should know about.
These accounts were introduced in 2017, with the aim of helping people aged 18 to 39 get on the property ladder by offering to boost their savings by 25%.
But the Money Saving Expert appeared on BBC Radio 5 Live, revealing: ‘The problem with a lifetime ISA – the big one is if you take your money out for any other reason than to buy a first time qualifying property or at retirement effectively when you’re age 60, you take a 25% penalty.’
He explained that someone saving £10,000 would end up with £12,500 with the government top-up.
But if you were to incur a 25% penalty for withdrawing the money you would be left with £9,375 – £635 less than what you put away to begin with.
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For the latest money news, advice and saving tips, scroll down.
Millions set to get Warm Home Discount payment
Sam CorbishleyMillions of households are set to receive a £150 discount on their energy bills this winter.
The Warm Home Discount is a one-off payment to help with the cost of energy during the winter months.
The scheme opens in October, with payments starting in November and applied automatically to most bills.
Most of those eligible will receive the discount automatically, as opposed to previous years when some claimants had to apply for the support.
Most eligible households will be sent a letter between November and January confirming their discount.
But it is important to check this has been done and get in touch with the scheme as soon as possible if the payment isn’t applied, as there is a limited time to sort out any issues.
DWP confirms when Winter Fuel Payment letters will be sent
Sam Corbishley
The DWP has confirmed that every person over State Pension age will be sent a letter explaining the new eligibility for winter fuel payments next month.
Under plans announced by Chancellor Rachel Reeves in July, winter fuel payments will be restricted to those receiving pension credit.
It means around 10 million people will lose out this winter, with the benefit taken away from all but the poorest pensioners in the country. About 11.5 million people used to receive it.
Responding to a question from Conservative MP Shivani Raja, who asked how the DWP planned to communicate the change to affected pensioners and what alternative financial support is available to them, Pensions Minister Emma Reynolds wrote: ‘From mid-October, all pensioners will receive a letter explaining the changes to Winter Fuel Payments this year and encouraging anyone who may be eligible to claim Pension Credit by December 21.’
She added that the dedicated pages on gov.uk have been updated with the new eligibility rules.
Martin Lewis warns aspiring homeowners of LISA penalty
Sam CorbishleySpeaking to BBC Radio 5 Live, Martin said: ‘You can take the money out only for one of two reasons: number one, you are buying a first time property, you’ve never bought a property before, you’ve never owned a property before and that property has to be worth under £450,000.
‘The second reason is you’ve hit age 60 and then you can take the money out and you get to keep the bonus. No one who has opened the ISA has hit age 60 yet because they haven’t been around long enough.
‘It’s a savings account. It’s just a tax-free savings account, but the real key to it is the 25% state bonus.
‘The problem with a lifetime ISA – the big one is if you take your money out for any other reason than to buy a first time qualifying property or at retirement effectively when you’re age 60, you take a 25% penalty.’
He revealed that £15 million worth of penalties were paid in the latest tax year, adding: ‘I don’t have a problem with that because that’s to ensure that people are only using the LISA for the reasons intended.
‘This is my problem, the LISA was launched in 2016. The property threshold limit in 2016 was £450,000 the property limit is still £450,000.
‘Many people, particularly in London, the southeast and other urban metropolitan areas, have been priced out due to rising house prices.
‘They’ve saved as the government advised for their first property, but now their property is valued over £450,000.
‘To withdraw the money, even to purchase a first-time property which is the purpose of this product, they face a significant penalty.’
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